The head of one of Portugal's biggest banks said today that it would be Germany, not the Portuguese government, that decided if the debt-laden country took an international bailout.
Fernando Ulrich, CEO of Banco BPI also said he hoped the International Monetary Fund and European Central Bank would not need to come to Portugal's aid with a rescue package, but if they did, it would not be a huge problem.
Portugal has been thrust into the frontline of the euro zone debt crisis in recent weeks and many economists and investors believe it will be the next country to need a bailout, following in the wake of Greece and Ireland.
Prime minister Jose Socrates insists that Portugal can survive without a rescue and that his austerity budget of tax rises and public sector wage cuts will keep the ship afloat.
But many analysts feel the bailout is just a question of when, not if.
"I hope the IMF does not return to Portugal but I don't see this as an extraordinary problem," Mr Ulrich said at a business breakfast in Lisbon.
"It is Germany that will decide if it comes, not the Portuguese government. Probably Germany and the other important countries in the euro zone hope that Portugal will manage on its own."
This year had been "disaster" for Portugal, he said.
"I would like to know what the government is going to do so that what happened in 2010 doesn't happen in 2011," he said, referring to increased government spending.
The new austerity measures also made a recession likely, he added.
Mr Ulrich, who is known for his forthright views, also poured scorn on the IMF and ECB when asked about labour reforms, which they see as vital to making the economy more competitive.
"These entities have no idea, they don't know the Portuguese reality. They have a superficial knowledge about how the Portuguese economy works," he said.
At the same business meeting, Rodrigo Costa, the head of Zon media and telecommunications company, also said the solution was not solely in Portugal's hands.
"It's not exclusively our problem. It's a problem of the system we are in. We are essentially in the hands of the system."
Any bailout would not solve matters once and for all, he said.
"This is an issue which will drag on. For some months, next year, a year-and-a-half, two years."
Many analysts say Portugal might need to be sacrificed to save its neighbour Spain, which is also under threat. While a bailout for Portugal is affordable, a rescue package for Spain's would severely deplete international coffers.
Portugal suffered a blow yesterday when its borrowing costs soared in a government Treasury bill auction, demonstrating sagging investor confidence in the Iberian nation. That followed a warning from Standard & Poor's rating agency that it might cut Portugal's credit rating.
But German economy minister Rainer Bruederle said he did not believe Portugal and Spain would need to tap euro zone rescue funds.
The government has promised to cut next year's budget deficit to 4.6 per cent of gross domestic product from 7.3 per cent this year, with across-the-board tax hikes and 5 per cent cuts in civil servants' wages.
Reuters